Varteks Group Reports a Loss of 23.3 Million Kuna in the First Quarter

Varteks Group reported a loss of 23.3 million kuna in the first quarter of this year, which is a 54.4 percent increase in loss compared to the same period last year when it amounted to 15.1 million kuna, according to the quarterly financial report released today by the Varaždin textile company on the Zagreb Stock Exchange.

Varteks emphasizes that the loss was significantly impacted by interest expenses amounting to 7.4 million kuna and severance payments as part of restructuring costs amounting to 1.1 million kuna.

Although the financial restructuring plan anticipates the write-off of total interest on the parent company, during the observed period before the implementation of the plan, the impact of interest costs is still present and is higher compared to the same period last year by 3.3 million kuna, states the company’s management in the report commentary.

At the end of last year, Varteks applied for pre-bankruptcy settlement based on liquidity criteria, which was opened on February 5 of this year.

In early 2013, the parent company, Varteks d.d., officially merged with related production companies (Varteks Clothing, Varteks Ludbreg, and Varteks Bednja), and the pre-bankruptcy settlement of all companies was consolidated into a single procedure. Due to the merger, certain items of business income and expenses and the level of total income are not comparable to the previous year, as noted in the report.

The management also reminds that the financial restructuring plan for Varteks was adopted in early June, which was confirmed at a hearing at the Commercial Court on July 11.

The plan defines a comprehensive solution and consolidation of the company’s operations, and thus of the Varteks Group. In its implementation, along with the application of several legally prescribed measures of financial restructuring, Varteks d.d. participates with a significant amount of its own contribution through the transfer and sale of part of its real estate to settle larger creditors, the management reminds.

It also states that, in accordance with the financial restructuring plan, the agreement with secured creditors is in the final phase. In it, along with the method of settling obligations, a new credit line of 10 million euros necessary for establishing liquidity, stabilizing business processes, and implementing other elements of restructuring is defined, emphasizes the management.

By the end of 2013, it is necessary to implement the planned measures, in accordance with the elements of the agreed and accepted financial restructuring plan, which also includes an agreement on the regulation of mutual relations with secured creditors and additional – new financing for Varteks, emphasizes the management in the report commentary.